Rocksonics Professional Audio has released Telephone, a simple yet highly realistic telephone audio emulator. This plug-in uses very steep, 6-pole, high-pass and low-pass filters to create the telephone audio bandwidth of 350Hz - 3KHz. A granulizer reduces the resolution to 8 bits just like the phone company. It works with both mono and stereo signals.
Telephone is available as a VST effect plug-in for Windows and it is free.